On Monday I did an interview with David Skarica about whether or not this market is heading for a blow-off top or not. You can listen to it by going here:
Yesterday saw some interesting comments from Davos by Paul Tudor Jones and Ray Dalio about the action in the stock market. Ray Dalio declared in comments aired on CNBC that at the moment “cash is trash,” but warned that things might get really crazy in the markets after 2020.
And Paul Tudor Jones said, “we’re just in the craziest monetary-fiscal [policy] mix in history. It’s so explosive, it defies imagination. It reminds me a lot of early ’99. The difference is the fed funds rate was 4.75% — today it’s 1.62%. Then we had a budget surplus, today we have a 5% deficit — you can’t make it up. … It’s crazy times.’
“We’re in such extraordinary times. We’ve never seen a fiscal monetary mix like this. So it argues for some massive blow-off at the top,” Jones said.
Both are big gold believers and have been right about that and will just continue to be right on gold. Gold, silver, and mining stocks I believe are still the best place to put money to work in this market.
One effect of all of the Fed’s monetary policies is that the corporate bond market made a new high yesterday. Take a look at the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEARCA: LQD) chart. It made a new high Tuesday.
If this ETF was fading while the stock market was going up I’d be worried. But it is not doing that. In fact it made a new high yesterday. There is still a potential danger pattern that could lead to a fast scary dip if it appears in the next few weeks, but yesterday’s action helps make it less likely to happen this quarter. I talked about that pattern setup in a private Power Investor update Sunday. This is the pattern that will likely make me do some selling and put on hedges when it happens.
Dave also has a new mining stock deal he is working on. Details with the podcast I did with him you can find here:
-Mike
